Rise in Fixed Mortgages and Fall in Variable Mortgage Spreads in Spain

Fixed mortgages are becoming more expensive in Spain.

This is demonstrated by the fact that at least six banks have made their fixed-rate mortgages more expensive throughout April

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Is about ING, Imaginbank, Evo Bank, Ibercaja, Openbank and Caixabankaccording to data from the Kelisto and Helpmycash comparators.

In the case of Imagin, this is a very representative example because, until April, this entity belonging to the Caixabank group was one of the few that offered a fixed mortgage with an interest rate of 3 percent or less.

Imagin raises the rate of its fixed mortgage to 3.40%

However, Since the beginning of the month, Imagin has applied a significantly higher fixed rate, of 3.40 percent..

The case of EVO Banco also stands out. Bankinter’s online entity has not only made its fixed mortgage significantly more expensive in mid-April (by raising the interest rate from 2.80 percent to 3.35 percent).

The fixed rate that applies in the initial period of your mixed mortgage has also increased (from 2.45 percent to 3.20 percent for the first 15 years of the life of the loan).

As it is, it seems that the upward trend in fixed mortgages that began in early 2022 continueswith the change in the monetary policy of the central banks.

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Variable Mortgage Spread Falls

Parallel to this rise in interest rates applied to fixed mortgages, variable mortgage spreads are falling.

In April, for example, there were at least four movements of this type, in Cajasiete, Abanca, Triodos Bank and EVO Banco.

In the case of this last entity, it reduced the differential of its variable mortgage from 0.50 percent to 0.48 percent, although it increased the fixed interest that this product has during the first months: 0.99 percent during the first year to 2.20 percent during the first two years.

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Cajasiete also increased the fixed rate that it initially applies to its mixed mortgage.

A double strategy of the Spanish bank to earn more money

Miquel Riera, an expert at the financial comparator Helpmycash, explains the reasons for this change in the Spanish mortgage market.

“These movements respond to a double strategy of the bank. On the one hand, they make their fixed and mixed mortgages more expensive (in their initial interest) to maintain their profit margins in the face of the latest rate hikes from the European Central Bank”, says Riera.

“And, on the other, they reduce the differentials of their variable mortgages (and make the other modalities more expensive) to encourage their contracting, because with the rise in the Euribor, they hope to earn more money with these products,” adds this expert.

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The rise in fixed mortgages slows down

In any case, what is certain is that the rate of increase in the cost of fixed-rate mortgages has slowed down compared to what happened a few months ago.

Estefanía González, spokesperson for the financial comparator Kelisto, explains it this way: “Changes continue to take place, but their pace and direction have slowed down a lot. Thus, if the mortgages that underwent changes became more expensive, on average, by 30 percent in October 2022; in January 2023, that figure has already dropped to 17 percent and, in April, to 0.35 percent.

González relates this situation to the fact that banks are increasingly selective with potential clients in a context of inflation and slow growth.

In this sense, in the face of lower demand, competition becomes tougher and entities “act with caution when executing possible increases” in fixed mortgages, which are the ones that are of most interest to savers.

Two banks lower their fixed mortgages

In fact, González recalls that two banks lowered their fixed mortgages in April, something that did not happen in January or October 2022.

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It is the Mari Carmen de Abanca Mortgage, which has reduced interest by fifteen basis points from 3.99 percent to 3.850 percent; and from Banco Sabadellwhich has cut the interest on the Fixed Rate Subsidized Mortgage from 3.6 percent to 3.5 percent.

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